Have Decades of GOP Deregulation & Safety Net Gutting Made Depression the New Normal?

Nobel Prize-winning economist and New York Times columnist Paul Krugman is never afraid to ask the tough questions. Though his Times blog bears the name “The Conscience of Liberal,” the title is sort of an unfortunate misnomer. Krugman’s esteemed reputation was fostered by a decidedly nonpartisan, common sense approach to policy evaluation. It is more a sign of the times that his Keynesian monetary philosophy has earned him the liberal firebrand label. It’s not that Krugman has moved to the left over the course of his career. It’s more that politicians, the media and other economy wonks have veered so far rightward.

I also appreciate that Krugman is an agitator, failing to be complacent about the status quo while accepting situations as “the way things are.” Thank goodness because we live in an era of such whitewashed talking points, of corporate media ownership and blurred lines between church and state that feed each other symbiotically. It’s a real challenge to stumble across any real, independent thinkers.

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This week, Krugman is at it again, acting as the proverbial thorn in the side of the “deficit scolds” he sees it as his civic duty to expose. In an early Monday morning column entitled, “A Permanent Slump?,” he wonders, “what if the world we’ve been living in for the past five years is the new normal? What if depression-like conditions are on track to persist, not for another year or two, but for decades?”

If it is indeed the case that the anemic job and economic growth we’ve experienced in recent years (and, as Krugman rightly points out, well precedes the late-2008 housing and stock market collapses) is now standard operating procedure, we have to go further. We must ask ourselves what’s changed? Why does it seem the robust glory days of the American middle class are behind us, and why should we accept this as so?

Krugman begins with a rather empirical observation about the undistinguished trap of modern economics. He notes, “the evidence suggests that we have become an economy whose normal state is one of mild depression, whose brief episodes of prosperity occur only thanks to bubbles and unsustainable borrowing.” Thus he ties the latter Bush II “boom years” not to genuine expansion, but rather the disingenuous fraud perpetrated by record household debt and criminally destructive mortgage lending.

Slower post-Boomer population growth, which has led to reduced demand for infrastructure, products and services is offered as an unavoidable accessory to the economy’s stagnation, as well as “persistent trade deficits, which emerged in the 1980s and since then have fluctuated but never gone away.”

All common sense as pertains to the “why?” and I’m sure that even most right-wing economists would find little with which to quibble thus far. But then Krugman transcends the talking point laziness afflicting most GOP think tanks and dares to ask “what?” we can do to upend this trap.

“Central bankers [including the Fed] need to stop talking about ‘exit strategies.’ Easy money should, and probably will, be with us for a very long time. This, in turn, means we can forget all those scare stories about government debt…if our economy has a persistent tendency toward depression, we’re going to be living under the looking-glass rules of depression economics — in which virtue is vice and prudence is folly, in which attempts to save more (including attempts to reduce budget deficits) make everyone worse off — for a long time.”

And this is where he goes in for the kill vis a vis Republican policymakers and the cowardly, election cycle-focused Democrats afraid to contradict them:

“I know that many people just hate this kind of talk. It offends their sense of rightness, indeed their sense of morality. Economics is supposed to be about making hard choices (at other people’s expense, naturally). It’s not supposed to be about persuading people to spend more.”

Ironically, the “spend more” doctrine was championed by George W. Bush after the atrocities of 9/11, rightfully so, in order to stave off a panic-induced economic contraction. The then-President offered up tax rebates and broadly encouraged Americans to use the funds to stimulate the economy, rather than save or pay down household debt. I offer this example not to champion the overall deficit-busting proclivities of Bush, but rather to hearken back to a time, just a little over a decade ago, when Republican economic policy went further than robbing the lower and middle classes to give gifts to the rich, all while performing Jedi mind tricks in an effort to convince the struggling that these actions were in their best interest.

For years now, the modern GOP has tried to leverage the Federal deficit, combined with “these are unusual times” rhetoric to try to wrench the social safety net out from under us, and delay job-creation spending to provide relief to the long-term unemployed. Only, as Paul Krugman demonstrates, these are not unusual times and current policy, if left unchecked, will only worsen the decline of hardworking American prospects.

That’s exactly what the one percent is hoping. If we let these tactics continue to succeed as they have, shame on all of us.